A Fontana Foreclosure Story

Foreclosures are not just facts and figures – it comprises of tales of real life people. One of these is a Fontana foreclosure story about a young lady confused and bewildered by the onslaught of the crisis. Fontana is a city in San Bernardino County in the state of California. It is a paradise close to mountains, lakes, beaches as well as desert areas. Basically it originated as a rustic town ruled by orchards and ranches. But with the setting up of a steel plant it became an industrial hub in the suburbs of San Bernardino.

The story of young Dulce Maya caught the headlines of LATimes. She is at her wits end fighting foreclosures. Maya is a 27 year old restaurant manager. Two years ago she bought a house consisting of three bedrooms and two toilets in Fontana for $350,000. She made a down payment of $5,000 dollars contracting a sub-prime ARM mortgage. Till this year she had to make a monthly repayment of $2,300. But now it will spike to $3,300. To add salt to her wound, her working hours have been sliced and this means less money at the end of the month. To make matters worse her house is now valued at $200,000. It has been a drop of 42%.

Maya has requested her lender to bring down the payment rate. If her bank does not agree then there is no alternative for her but to hand over the keys to her lenders. She is totally confused about what her next move should be. Perhaps she will look around for a rented accommodation but with demand and rents rising it is going to be tough going for Maya.

The big question is – can this mortgage be saved? Will Maya be able to stay in the house that is her home? Dodd-Frank plans will back up a new mortgage at 85% of the current value. It translates to $170,000. It will make monthly payments more affordable for her by coming down to $1,700 for a 30 year conventional mortgage at a fixed rate of 6%. For Maya no offer could be better.

But the problem is will the lender agree to take $170,000 for a loan initially contracted for $345,000? Complications will become worse if more than one lender is involved – which is usually the case. Moreover it  will make the neighbours raise their eyebrows – those who are not lucky enough to qualify for the Dodd-Frank plan for similar houses

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